WIMMERA councils will be able to marginally increase their rate cap in the next financial year.
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The state government has announced it will set the 2019-20 cap at 2.5 per cent for all councils, a 0.25 per cent increase on this year’s cap. The new figure will match the Consumer Price Index.
Hindmarsh Shire mayor Ron Ismay said the higher cap might allow slightly more flexibility in council’s budget.
“Yarriambiack exceeded their cap this year and it gave them an extra $39,000, with rates increasing 2.57 per cent on average,” he said.
“Going by that I think we'd be pretty similar, so it might give us an extra $30,000.
“An extra 0.25 per cent is a little bit neither here nor there to a certain extent, but it could be the difference between us being able to add a small project that we'd like to do.”
The state government introduced rate capping for the 2016-17 financial year.
Councils also apply to the Essential Services Commission for a cap exemption, which some Wimmera councils have done in the past.
Cr Ismay said he did not believe Hindmarsh would need to apply for a cap increase for 2019-20.
“I think our finances are reasonably sound at the moment and I wouldn’t think we’d be in a position to need an exemption,” he said.
“The biggest thing is if you don’t increase things little by little, further down the track you've got to do big increase.”
Yarriambiack Shire Council chief executive Jessie Holmes said the council's rate cap would be lower than 2.5 per cent in 2019-20, to accommodate for an error that saw rates increase above the cap this year.
"Yarriambiack will take 0.27 off the rate cap, so ours will be a 2.23 per cent rate cap," she said.
The error was due the council receiving its property valuations five weeks late.
"We're moving to annual valuations now so it will be interesting to see what impact that has," she said.
"The valuer general's office has also moved its timeframe forward for the valuations as well to accommodate those annual valuations.
"I think in the next two years we will have a bit more of an idea of how the annual valuations will impact the rate cap."
Ms Holmes said the council's service costs continued to increase.
"We don't have different revenue streams, so we're heavily reliant on the rate revenue that we get," she said.
"The rate cap increase of 0.25 per cent for most councils is probably going to be a difference of somewhere between $30,000 and $100,000, so we are also very reliant on state government grants.
"You want people to feel like they're getting value for the rates that they're paying. We have $160 million worth of assets to manage and maintain."
The council changed its farm land differential from 78 to 76 in its 2018-19 budget.
Horsham Rural City Council chief executive Sunil Bhalla said a cap of 2.5 per cent put pressure on council’s finances to deliver the expected level of services and projects.
“We are working to find efficiencies through our operations and see where we can be more efficient and get some savings to make sure our service delivery is not compromised,” he said.
“Also, there are works around longer-term planning in place to deal with the impact of the rate cap. We will need to do work on the long-term financial planning and infrastructure because that is the key part of our business – maintaining the assets and making sure there is a longer-term plan to deal with that.
“It clearly has an impact on the services council delivers. In relative terms it is higher than what the council delivers because the rate cap is actually back through the CPI and wage index.
“Assets and infrastructure move at a higher rate than the CPI and it is not enough to cover all the cost.
“We need to work through it and stay as efficient as we can in the delivery of services and projects.”
Mr Bhalla said councillors had discussed whether to seek a rate cap exemption for 2019-20.
“At this stage, we are not keen to do that because we already feel like it is a burden on the households,” he said.
Victorian Premier Daniel Andrews announced in November it would launch an inquiry into the council rating system if Labor was re-elected to government.
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